SARFAESI Act Open to CMMDM to appoint advocate commissioner to assist in execution of order says SC
New Delhi Feb 25 PTI The Supreme Court Friday said it would be open to the chief metropolitan magistrate or the district magistrate to appoint an advocate commissioner to assist in execution of order passed under section 14 1 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest SARFAESI Act 2002 Section 14 of the SARFAESI Act deals with the aspect related to chief metropolitan magistrate CMM or district magistrate DM to assist the secured creditor in taking possession of a secured assetA bench of Justices A M Khanwilkar and C T Ravikumar said the underlying purpose of the 2002 Act is to empower the financial institutions in India to have similar powers as enjoyed by their counterparts that is international banks in other countries and one such feature is to empower them to take possession of securities and sell themWe hold that it would be open to the CMMDM to appoint an advocate commissioner to assist himher in execution of the order passed under Section 141 of the 2002 Act said the bench in its 48-page judgementThe top court delivered the verdict on a batch of pleas which involved the question whether it is open to the DM or the CMM to appoint an advocate and authorise him or her to take possession of the secured assets and documents relating thereto and to forward the same to secured creditor within the meaning of section 141A of 2002 ActThe bench noted that advocate commissioner is not a new concept and lawyers are appointed as court commissioner to perform diverse administrative and ministerial work as per the provisions of the Code of Civil Procedure and Code of Criminal ProcedureIt is well established that an advocate is a guardian of constitutional morality and justice equally with the judge He has an important duty as that of a judge He bears responsibility towards the society and is expected to act with utmost sincerity and commitment to the cause of justice He has a duty to the court first it saidPertinently no such rule has been framed by the Central government in reference to sub-section 1A of section 14 of the 2002 Act much less to expressly or by necessary implication prohibiting the CMMDM to engage an advocate commissioner for taking possession of the secured assets In absence thereof exclusion of engagement of an advocate as commissioner cannot be countenanced it addedThe bench noted that Section 14 of the Act predicates that if the secured creditor intends to take possession of the secured assets he must approach the CMMDM by way of an application in writing and on receipt of such request the magistrate must move into action in right earnestAs soon as such an application is received the CMMDM is expected to pass an order after verification of compliance of all formalities by the secured creditor referred to in the proviso in section 141 of the 2002 Act and after being satisfied to take possession of secured assets and documents relating thereto and to forward them to secured creditor at the earliest opportunity it saidThe latter is a ministerial act It cannot brook delay Time is of the essence This is the spirit of the special enactment However it is common knowledge that the CMMDM are provided with limited resources it saidThe apex court said that inevitably makes it difficult if not impossible for the CMMDM to fulfil his or her obligations with utmost dispatch to uphold the spirit of the special legislationIt is common knowledge that in the respective jurisdictions there is only one CMMDM If he is expected to reach at every location himself for taking possession in some jurisdictions it would be impracticable if not impossible for him to do so owing to large number of applications in the given jurisdiction being a commercial city it saidHowever we are persuaded to take the view that an advocate is and must be regarded as an officer of the court and subordinate to the CMMDM for the purposes of section 141A of the 2002 Act the apex court saidThe bench further observed that there is no reason to assume that the advocate so appointed by the CMMDM would misuse the task entrusted to him or her and that will not be carried out strictly as per law or it would be a case of abuse of powerRather going by the institutional faith or trust reposed on advocates being officers of the court there must be a presumption that if an advocate is appointed as commissioner for execution of the orders passed by the CMMDM under section 141 of the 2002 Act that responsibility and duty will be discharged honestly and in accordance with rules of law it saidIn our view in law an advocate is an officer of the court and thus subordinate to the CMMDM Further there is no indication in the 2002 Act or the Rules made thereunder to exclude such interpretation it saidThe bench was dealing with pleas including those arising out of the Bombay High Court judgement of November 2019 which had opined that the advocate not being a subordinate officer to the CMM or DM such appointment would be illegalThe top court was also dealing with pleas filed against the Madras High Court verdict of March 2020 which had taken a contrary view while following earlier decision of the same high court on the reasoning that advocate is regarded as an officer of the court and thus subordinate to the CMM or the DM PTI ABA SA
New Delhi Feb 25 PTI The Supreme Court Friday said it would be open to the chief metropolitan magistrate or the district magistrate to appoint an advocate commissioner to assist in execution of order passed under section 14 1 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest SARFAESI Act 2002 Section 14 of the SARFAESI Act deals with the aspect related to chief metropolitan magistrate CMM or district magistrate DM to assist the secured creditor in taking possession of a secured assetA bench of Justices A M Khanwilkar and C T Ravikumar said the underlying purpose of the 2002 Act is to empower the financial institutions in India to have similar powers as enjoyed by their counterparts that is international banks in other countries and one such feature is to empower them to take possession of securities and sell themWe hold that it would be open to the CMMDM to appoint an advocate commissioner to assist himher in execution of the order passed under Section 141 of the 2002 Act said the bench in its 48-page judgementThe top court delivered the verdict on a batch of pleas which involved the question whether it is open to the DM or the CMM to appoint an advocate and authorise him or her to take possession of the secured assets and documents relating thereto and to forward the same to secured creditor within the meaning of section 141A of 2002 ActThe bench noted that advocate commissioner is not a new concept and lawyers are appointed as court commissioner to perform diverse administrative and ministerial work as per the provisions of the Code of Civil Procedure and Code of Criminal ProcedureIt is well established that an advocate is a guardian of constitutional morality and justice equally with the judge He has an important duty as that of a judge He bears responsibility towards the society and is expected to act with utmost sincerity and commitment to the cause of justice He has a duty to the court first it saidPertinently no such rule has been framed by the Central government in reference to sub-section 1A of section 14 of the 2002 Act much less to expressly or by necessary implication prohibiting the CMMDM to engage an advocate commissioner for taking possession of the secured assets In absence thereof exclusion of engagement of an advocate as commissioner cannot be countenanced it addedThe bench noted that Section 14 of the Act predicates that if the secured creditor intends to take possession of the secured assets he must approach the CMMDM by way of an application in writing and on receipt of such request the magistrate must move into action in right earnestAs soon as such an application is received the CMMDM is expected to pass an order after verification of compliance of all formalities by the secured creditor referred to in the proviso in section 141 of the 2002 Act and after being satisfied to take possession of secured assets and documents relating thereto and to forward them to secured creditor at the earliest opportunity it saidThe latter is a ministerial act It cannot brook delay Time is of the essence This is the spirit of the special enactment However it is common knowledge that the CMMDM are provided with limited resources it saidThe apex court said that inevitably makes it difficult if not impossible for the CMMDM to fulfil his or her obligations with utmost dispatch to uphold the spirit of the special legislationIt is common knowledge that in the respective jurisdictions there is only one CMMDM If he is expected to reach at every location himself for taking possession in some jurisdictions it would be impracticable if not impossible for him to do so owing to large number of applications in the given jurisdiction being a commercial city it saidHowever we are persuaded to take the view that an advocate is and must be regarded as an officer of the court and subordinate to the CMMDM for the purposes of section 141A of the 2002 Act the apex court saidThe bench further observed that there is no reason to assume that the advocate so appointed by the CMMDM would misuse the task entrusted to him or her and that will not be carried out strictly as per law or it would be a case of abuse of powerRather going by the institutional faith or trust reposed on advocates being officers of the court there must be a presumption that if an advocate is appointed as commissioner for execution of the orders passed by the CMMDM under section 141 of the 2002 Act that responsibility and duty will be discharged honestly and in accordance with rules of law it saidIn our view in law an advocate is an officer of the court and thus subordinate to the CMMDM Further there is no indication in the 2002 Act or the Rules made thereunder to exclude such interpretation it saidThe bench was dealing with pleas including those arising out of the Bombay High Court judgement of November 2019 which had opined that the advocate not being a subordinate officer to the CMM or DM such appointment would be illegalThe top court was also dealing with pleas filed against the Madras High Court verdict of March 2020 which had taken a contrary view while following earlier decision of the same high court on the reasoning that advocate is regarded as an officer of the court and thus subordinate to the CMM or the DM PTI ABA SA
